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Q3 2016: Swiss Post’s profit declines in third quarter

In the first three quarters of 2016 Swiss Post generated a Group profit of 466 million francs (previous year: 503 million francs). Operating profit (EBIT) decreased from 640 million to 593 million francs. In the first nine months of 2016, Swiss Post generated Group profit of 466 million francs, 37 million francs less than in the prior-year period. The operating profit of 593 million francs was 47 million francs below the prior-year figure. This decrease was mainly due to the lower result from the communication and logistics markets; the decline in the volume of addressed letters was more pronounced and pressure on parcel margins remains high. At 6,039 million francs, operating income was on a par with the previous year (6,015 million francs).

In the communication market, Swiss Post recorded an operating profit of 94 million francs in the first three quarters of 2016 (previous year: 166 million francs). The decline in profit generated by Post Offices & Sales is principally due to the Group unit’s new internal cost allocation. Operating profit at PostMail fell by 11 million francs to 235 million francs, while Swiss Post Solutions increased its contribution to the result by 5 million to 15 million francs. The decline in the volume of addressed letters was more pronounced: the number fell by almost 4 percent.

In the logistics market, PostLogistics recorded an operating profit of 73 million francs (previous year: 95 million francs). The logistics market continues to be characterized by increasing competition and price pressure, both nationally and internationally. Despite additional income from the 5.6 percent rise in parcel volumes (previous year: + 2.5 percent) and increased demand for value logistics solutions, operating profit fell. This decline is due to modifications to the Group unit’s internal cost allocation.

In the passenger transport market, PostBus increased its operating profit by one million francs to 30 million francs thanks to the low price of fuel. As the budgets of the public entities which act as contracting bodies for transport services are squeezed, the pressure on prices continues to rise.

Sharp decline in interest income

Operating EBIT at PostFinance declined in the first nine months of 2016, principally as a result of the sharp decline in interest income (-93 million francs year-on-year). Thanks to non-recurring revenue from the sale of equity holdings and a participation, PostFinance nonetheless generated operating profit (EBIT) of 410 million francs (previous year: 351 million francs). Despite this, the negative trend in business operations will continue in the coming years, as it is increasingly difficult for PostFinance to find profitable investments for the customer deposits entrusted to it in the current negative interest rate environment due to the lending prohibition.

Outlook

Given the current tense market environment, it will become more and more difficult for Swiss Post to achieve the financial goals set by its owner. As things stand today, Swiss Post nonetheless expects to meet these goals in 2016. Group profit is likely to be below the previous year’s level.

1 The operating profit corresponds to the result before net non-operating financial income and taxes (EBIT).2 Normalized figures.3 FTEs = Full-time equivalents. Average expressed in terms of full-time equivalents, excluding trainees

PostFinance Ltd key figures

Unit1

Full year 2015

Q3 2015

Q3 2016

PostFinance Ltd key figures

Number of customers

Unit1

In thousands

Full year 2015

2,951

Q3 2015

2,951

Q3 2016

2,951

PostFinance Ltd key figures

Number of customers accounts

Unit1

In thousands

Full year 2015

4,835

Q3 2015

4,832

Q3 2016

4,784

PostFinance Ltd key figures

Customer assets

Unit1

CHF million

Full year 2015

114,866

Q3 2015

113,011

Q3 2016

120,381

PostFinance Ltd key figures

Customer assets in partner solutions

Unit1

CHF million

Full year 2015

7,772

Q3 2015

7,466

Q3 2016

7,956

PostFinance Ltd key figures

Mortgages
2

Unit1

CHF million

Full year 2015

5,089

Q3 2015

4,988

Q3 2016

5,243

PostFinance Ltd key figures

Loans to business customers

Unit1

CHF million

Full year 2015

9,063

Q3 2015

8,097

Q3 2016

9,372

PostFinance Ltd key figures

E-finance users

Unit1

In thousands

Full year 2015

1,683

Q3 2015

1,672

Q3 2016

1,736

PostFinance Ltd key figures

Headcount

Unit1

FTEs
3

Full year 2015

3,571

Q3 2015

3,550

Q3 2016

3,612

PostFinance Ltd key figures

Transactions processed

Unit1

In millions cumulative

Full year 2015

1,020

Q3 2015

746

Q3 2016

768

1 At end of period (unless otherwise stated).2 In cooperation with partner banks.3 FTEs = Full-time equivalents. Average expressed in terms of full-time equivalents.

Selected key figures per segment (Group units)

Operating income (CHF million)1

Group unit

30. Sept. 2015

30. Sept. 2016

Difference (CHF million)

Operating income (CHF million)1

Communication market

Group unit

PostMail

30. Sept. 2015

2,060

30. Sept. 2016

2,149
7

Difference (CHF million)

89

Operating income (CHF million)1

Communication market

Group unit

Swiss Post Solutions

30. Sept. 2015

456

30. Sept. 2016

416

Difference (CHF million)

-40

Operating income (CHF million)1

Communication market

Group unit

Post Offices & Sales

30. Sept. 2015

1,122

30. Sept. 2016

828
7

Difference (CHF million)

-294

Operating income (CHF million)1

Logistics market

Group unit

PostLogistics

30. Sept. 2015

1,131

30. Sept. 2016

1,144
7

Difference (CHF million)

13

Operating income (CHF million)1

Financial services market

Group unit

PostFinance
3

30. Sept. 2015

1,602

30. Sept. 2016

1,638

Difference (CHF million)

36

Operating income (CHF million)1

Passenger transport market

Group unit

PostBus
4

30. Sept. 2015

627

30. Sept. 2016

684

Difference (CHF million)

57

Operating income (CHF million)1

Other
5

Group unit

30. Sept. 2015

704

30. Sept. 2016

680

Difference (CHF million)

-24

Operating profit (CHF million)
1, 2

Group unit

30. Sept. 2015
6

30. Sept. 2016

Difference (Mio. CHF)

Communication market

PostMail

246

235
7

-11

Communication market

Swiss Post Solutions

10

15

5

Communication market

Post Offices & Sales

-90

-156
7

-66

Logistics market

PostLogistics

95

73
7

-22

Financial services market

PostFinance
3

351

410
7

59

Passenger transport market

PostBus
4

29

30

1

Other
5

-1

-14

-13

1 Operating income and operating profit (EBIT) by segment are reported before management, licence fees and net cost compensation.2 The operating profit corresponds to the result before net non-operating financial income and taxes (EBIT). The sharper decline in Post Offices & Sales profit (EBIT) compared with the prior-year period is principally due to the new internal performance mandate of the Group unit or the transfer of responsibility for postal private customer products from Post Offices & Sales to PostMail and PostLogistics3 PostFinance Ltd also applies the accounting rules for banks, securities dealers, financial groups and conglomerates (ARB). There are differences between the ARB and the IFRS results.4 Within regional public transport, PostBus Switzerland Ltd is subject to the DETEC ordinance on the accounting of licensed businesses (RKV). There are differences between the RKV and the IFRS results.5 Includes service units (Real Estate and Information Technology) and management units (e.g. Human Resources, Finance and Communication).6 Normalized figures.7 Figures affected by the new internal performance mandate for Post Offices & Sales.